NEW YORK (AP) — Microsoft bucked the gravitational pull of a recent report on flagging PC sales and its shares rose Friday after topping Wall Street expectations for the third quarter and revealing an aggressive push into the computer tablet market.
THE SPARK: Late Thursday, Microsoft said it earned $6.1 billion, or 72 cents per share, in the third quarter. That easily beat analyst expectations, according to a poll by FactSet.
And Chief Financial Officer Peter Klein said the company will be producing smaller touch-screen devices, presumably referring to 7-inch versions of its Surface tablets.
THE ANALYSIS: Analysts said the results showed some resilience in the face of declining PC sales, but some still trimmed estimates going forward.
The company "faced another challenging quarter owing to the weak PC market, yet the co. again was able to deliver very respectable results," wrote Gregg Moskowitz at Cowen & Co. He cut his revenue forecast for the current quarter by 2 percent to $20.8 billion and the forecast for next fiscal year, which starts in July, by 1.2 percent. He still sees Microsoft increasing its earnings by 10 percent to 11 percent per year in the long term.
John DiFucci at JP Morgan raised his estimates for the current quarter and next fiscal year by a few percent, based on strength in Microsoft's online services, which include the Bing search engine, and in the Xbox gaming business.
SHARE ACTION: Microsoft Corp. rose 92 cents, or 3.2 percent, to $29.72 in midday trading.